When Aviva Canada launched a direct-writing trial balloon earlier this year in partnership with Maple Leaf Sports and Entertainment, the deal quickly came under fire from angry brokers.

The Insurance Brokers Association of Ontario immediately took aim, turfing the company out of its sponsorship program and accusing the insurer in a statement by President Colin Simpson of proving “once again that they are not a true partner to the collective broker channel in Ontario.”

The team-up with the owners of two of the city’s biggest sports franchises allows fans of the Toronto Raptors and the Toronto Maple Leafs to purchase team-branded home and auto insurance, provided by Aviva.

But Simpson branded the offering “confusing to consumers and damaging” to brokers forced to explain why they couldn’t offer the same deal to their Aviva insureds.

Whether or not the public rebuke did any lasting damage to Aviva’s direct writing efforts remains to be seen, but not everyone was happy with the IBAO’s aggressive stance.

Bruce Rabik, the chief operating officer at Rogers Insurance, says he would have preferred a more diplomatic approach to the situation.

“There’s no point in starting a war within the industry when the real threat at this juncture is from outside disruptors,” says Calgary-based Rabik. “I think we need more bridges between insurers and brokers.”

While a lot of brokers may find themselves wondering how they can gain and retain customers in a competitive direct-writing market, we find out what they can learn from directs to drive their own businesses forward…

1. Market demands multi-channel distribution

Direct writing by insurers with existing broker channels is nothing new. For example, Intact Insurance markets to the public under its Belairdirect brand, while RSA Canada goes by Johnson in the direct market.

But multi-channel brokers are keen to emphasize that their direct arms are not thriving at the expense of their broker channel. Michael Shostak, the chief marketing officer at Economical Insurance, says that the development of its direct arm, Sonnet, was never meant to conflict with the company’s broker business.

“We’re investing as much in the broker channel from a technological and process perspective as we are in the direct channel,” Shostak says. “For most carriers, the majority of their revenue comes through the broker channel. It’s very important to us, and I don’t see that changing any time soon.”

Many brokers feel Aviva crossed an invisible line by failing to adopt an alias for its foray into direct writing, but Rabik says their concerns are overblown.

“They’re fighting yesterday’s battles. Aviva is a great supporter of the broker channel. They’re simply trying to catch up on other insurers who are already operating in the multi-channel world,” he says. “As long as they’re supporting brokers, then the stronger they are, the stronger we are.”

…starting to think like a direct, instead of thinking of directs as competition, may work well for the broker.”

And despite what the IBAO might think, Aviva vice-president Jason Storah insisted in the wake of the MLSE controversy that the company retains its desire to work with brokers.

“Aviva Canada remains fully committed to our broker partners,” Storah said in a statement to CITB, promising to open a dialogue about “how we continue to develop our business together.”

Elsewhere, Renee Durepos, the senior vice-president of operations at broker management firm Keal Technology, sees evidence of carriers’ commitment to the broker channel in Quebec, where insurers have used a legislative review of the sector to lobby for the scrapping of the “20 per cent rule” that limits their investment level in brokerages.

“What it tells me is that insurers believe in brokerages,” Durepos says. “If they didn’t, they would stop supporting the independent distribution channel.”

The message is clear: there’s a market for multi-channel distribution, and that means a world in which both directs and brokers thrive. And starting to think like a direct, instead of thinking of Directs as competition, may work well for the broker.

2. Technology is your friend

Durepos says one of the biggest contrasts between direct insurers and brokers comes in their attitude to new technology: “Right now, a minority of brokers are embracing technology and what it can do. Instead, for many, they fear it,” she says. “With directs, it’s in their blood. It’s part of their operations. And that’s why they have been eating away at the market share of other channels over the last few years.”

“Consumers these days want to be able to go into the online portal at two in the morning to make updates to their personal information, and directs can give them that. They don’t want to wait until tomorrow when the brokerage office opens up,” she adds.

While some brokers talk a good game when it comes to technology, Durepos says it doesn’t always translate into practice.

“There has to be a percentage of the budget set aside, like you would for human resources and other parts of the business. You need to put your money where your mouth is and invest in technology to give it a chance,” she says.

Durepos says insurers have capitalized on call recording technology to boost the productivity of client service representatives, an area she believes brokers have steered clear of for fear standardized processes and scripted calls will strip them of some of their charm.

“There are ways that scripts and other tools can be adjusted to the broker environment. You can have a script without sounding robotic and losing your role as a trusted advisor,” she says. In fact, she says these systems can even boost the personal touch by using call history to generate prompts about the caller’s insurance needs, as well as details about their private and professional lives.

…a minority of brokers are embracing technology and what it can do… they fear it. With directs, it’s in their blood.”

3. Know your customers (better)

Brokers pride themselves on their relationships with individual clients, but are rarely equipped to capitalize on all the information they hold about their customers, according to Stan Ivankovic, an insurance industry consultant with Environics Analytics in Toronto. “Directs are leveraging data analytics at a very high level, and using it to produce well-informed, targeted offerings to the public,” he says. “Obviously they have huge resources available to them, both in terms of the talent pool and the technology available to them, but I think there are opportunities there for some of the mid-sized and larger brokerages.”

Ahead of the Sonnet launch Economical spent two years conducting a survey of around 5,000 consumers on their insurance preferences. Based on the results, they divided up the Canadian population into five segments, depending on their propensity for broker-style advice on insurance products, and their level of technological savviness. “Two of the five segments clearly value the broker experience. Within the other three, who prefer the convenience of online services, exists a segment of about 14 percent who could choose either broker or direct. Both digital capabilities and improving the broker experience are important to attract this segment,” Shostak says. “We want to provide people with the capability to transact with us in the way they prefer.”

4. Marketing masterclass

Rabik says brokers should be inspired by Aviva’s deal with MLSE.

“It’s a great marketing program. Brokers should be looking at whether they can do something similar in their own communities. And if you go to Aviva, I’m sure they would be happy to say ‘here’s how we did it,’” Rabik says. “There’s a ton we can learn from directs. Sometimes you just have to ask. I have yet to find an insurer that operates in multiple channels that is not very cooperative with brokers.”

At CAA Insurance, business development and risk management lead Robin Joshua says his company will often help broker partners out with their own marketing and advertising strategies.

“We have that expertise. Most directs have a brand that is well known, and brokers can leverage that,” Joshua says. “Sometimes we’ll engage in co-branding, and sometimes we’ll give them the tools to go and market on their own.

5. Innovation rules

Carriers also operate an open-door policy when it comes to their innovation hubs, says Rabik, who has enjoyed tours of the Intact Lab in Montreal and Aviva’s Digital Garage in downtown Toronto. Both centres are focused on promoting digital development in the insurance business.

“There are a lot of learning opportunities available for brokers,” Rabik says.

Most directs have a brand that is well known, and brokers can leverage that.”

Ivankovic suggests brokers could set up their own labs by partnering with universities and colleges, especially those in smaller cities and towns where large carriers don’t tend to have a strong presence.

“There will be people with advanced abilities in analytics that they can start to develop relationships with,” he says.

Rogers and several other members of the Canadian Broker Network have put their digital ambitions to the test by launching Bullfrog Insurance, an Internet-based brokerage selling commercial insurance online.

“We’ve risked a lot of our own money to build it, but it is showing significant signs of success,” Rabik says. “We have had lots of help from insurance companies all the way through, but if they decided to stop supporting us, I wouldn’t be worried. In the end, if I do a fantastic job for consumers, it will succeed no matter what. They don’t care who’s on the other side of the website. All they care about is how cheap, easy and appropriate it is.”